2024 (3) TMI 793 - AT - Central Excise

Process amounting to manufacture - unauthorised manufacture and removal of pressure tanks meant for the storage and transportation of carbon dioxide - time limitation - HELD THAT - It can be seen that the Tribunal in SOUTH INDIA CARBONIC GAS INDUSTRIES VERSUS COLLR. OF C. EXCISE, MADURAI 1993 (6) TMI 177 - CEGAT, MADRAS had set aside the demand in respect of pressured vessels for the disputed period on the ground of limitation - the Tribunal had held that there is no suppression of facts with intent to evade payment of duty on the part of the appellant and set aside the demand on the ground of limitation. The matter was remanded to the Adjudicating Authority only for reconsidering the issue as to whether the activity carried out by the appellant in the nature of providing insulation to the pressured vessels would amount to manufacture or not. The Department had not filed any appeal against such order. The same has attained finality. The demand having been set aside by the Tribunal on the ground of limitation, as per SOUTH INDIA CARBONIC GAS INDUSTRIES, the demand confirmed by impugned order requires to be set aside. The impugned order is set aside to the extent of confirming the demand and the penalties imposed without interfering with the findings or discussions in the impugned order as to issue of manufacture - appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are whether the activity of carrying out insulation on pressured vessels amounts to manufacture and whether the demand for Excise duty and penalty imposed by the Original Authority is legal and proper.

Issue 1 - Activity of Insulation on Pressured Vessels:
The appellants, engaged in manufacturing carbon dioxide gas, were investigated by the Central Excise Department for unauthorized manufacture and removal of pressure tanks without duty payment. The Department alleged that insulation of pressured vessels constituted manufacture, leading to duty liability. A Show Cause Notice was issued, and the Original Authority confirmed duty demand on FRP Sheets and pressured vessels. The Tribunal initially upheld FRP Sheets duty but set aside pressured vessels demand due to limitation, deeming the activity not constituting manufacture. Upon remand, the Adjudicating Authority again held the activity not amounting to manufacture, but the Department appealed. Despite the matter's 12-year reconsideration, the Authority confirmed duty and penalty, prompting the appellant's appeal.

Issue 2 - Legal and Proper Demand Confirmation:
The appellant argued that the Tribunal's prior order setting aside the demand on pressured vessels for limitation barred the Adjudicating Authority from confirming the demand in denovo proceedings. The appellant emphasized that the Authority should have focused solely on whether the activity constituted manufacture. The Department contended that the Tribunal's 2001 remand validated the demand. However, the Tribunal clarified that the 1993 order's limitation-based dismissal of the demand had finality, rendering the subsequent demand confirmation improper. Consequently, the Tribunal set aside the impugned order's demand confirmation and penalties, allowing the appeal with appropriate relief.

(Order dictated and pronounced in open court)